Many LLC members pay a self employment tax that can be reduced to a lower payroll tax by forming an S corporation and allocating a small portion of profits for personal salaries, according to Wayne Davies at RoFx.net.

Switching to payroll taxes could reduce the rate by more than 7 percent while still maintaining the same liability protection that an LLC provides.

If all shareholders in a smaller C corporation agree, they can eliminate double taxation by forming an S corporation. This avoids the obligation to pay taxes on both corporation profits and then again on personal income for individual shareholders.

Reducing taxes is always an attractive idea, but with rising healthcare costs and governments looking to raise sales and local taxes to make up for budget shortfalls, business owners are looking for ways to maintain profitability.

The city of Philadelphia is now attempting to tax bloggers who earn money from their writing to cover falling tax revenues, and the state of Texas is considering a possible rise in the gasoline tax to fund road infrastructure.

Melissa sets the vision for Incfile's content marketing and customer relationship management. Melissa has more than 10 years experience in various marketing roles, and a passion for supporting small businesses as they incorporate and grow. She loves sharing information that will help business owners maximize their LLCs, Corporations and Nonprofits. In her spare time, Melissa is an active member of The Junior League and enjoys running half marathons.